Tuesday, April 30, 2013

Trends: The market was higher today compared with last week with calves mostly steady to 3.00 higher, spots up to 5-6 higher on high quality offerings. Slaughter cows and bulls were steady to 2.00-3.00 higher. Most of the talk after the sale centered around the corn planting and how fast the sodbusters could get the seed planted when the conditions allow. Corn futures were up the limit on all the talk of late planting and as a result feeder cattle were down 100+ points. I think we will be on this up and down ride until some solid information is known about how large the corn crop will be.

Let's not succumb quite yet to fearmongering triggered by the prospects of
a delayed start to corn planting in 2013. “Mudding in” a crop early to avoid
planting late will almost always end up being an unwise decision. While important,
planting date is only one of many yield-influencing factors for corn.
Another reason that it is probably too early to fearmonger about the anticipated
late start to planting is that growers have the machinery capacity to "catch
up" quickly once the weather and soil conditions become favorable for
planting. The 1992 planting season began as one of the slowest but
quickly recovered within two weeks to a respectable pace and finished
the season with the largest POSITIVE departure from trend yield in the past
20 years. We also know from past years' experiences that, on average, 50%
of a state's corn crop is typically planted over about an 21-day period. Furthermore, it is not unheard of for growers to plant 45 to 50%
of a state's crop in a single week given good working condition.

Friday, April 26, 2013

I hate to quote Jerry Garcia but "what a long strange trip we are on". Ok, I paraphrased some but it accurately describes the roller coaster ride the cattle market has been on lately. It is kind of like playing a hand of Texas holdem where your only options for betting are All In or to Fold. We started the week with everyone wondering were the bottom is and ended the week with every feeder cattle contract above the 34 day moving average. Jackpot!! Fundamentals seem to get about as much use as a 9th grade boys Greek Literature book and in case you have never been a 9th grade boy, let me tell you that isn't much. For example, the market completely ignored last week's seemingly grizzly bearish placement figures and turned into the Schlitz Malt liquor bull. Every crop centered publication in the Western Hemisphere has been printing non stop about the late planting and cold spring weather but corn futures are nose diving. All it takes is one fake tweet to send the markets in a death spiral as the Stock Market proved this week as well. It takes a strong stomach to play the one armed bandit that the cattle market has become lately. After saying all that, all the fundamentals are lined up for a rally in feeder cattle. All of the big three indicators are bullish. Supply is well documented to be tight as Dick's hat band, demand is finally getting the spring time seasonal temperature moderation it needs to sell more product, and feed cost seem to be headed to a more reasonable figure. To add more fuel to the optimism I have seen a definite increase in the amount of heifers being held back as replacements which is going to make Dick's head really hurt in the short term. All in all it has been a good week for sellers and if you have any cattle ready to market I say push the chips to the middle of the table and say "All In".

Trends:The Market continues to be on uneasy footing with Feeder Cattle Futures continuing
their downward trend. The Cattle on Feed report on Friday added to the bearish
tone with larger than expected placements of 106 percent that caught most soothsayers
by surprise. The larger placements this year is a little deceiving because last
year April placements were at 93 percent of 2011, so other than the gnashing of teeth because everyone got it wrong it is really not a big deal. The
winter that will not end in the north continues to delay the much needed summer
grilling push for the meat causing concerns about the growing inventory
in Cold Storage. On a positive note gas
prices have lowered in the last week and most of the major grazing areas of the
country continue to get moisture in the form of rain or snow. I have also be told by a few different Market Gurus that they think we are near the bottom of the feeder cattle market slide and expect higher prices throughout the summer. Who knows why or if they are right but one thing is for sure, if you want to buy them you are going to have to fight because supplies are tight and everyone knows it. Calf market here today was mixed again with
cattle under about 600lbs that were suitable for grass staying steady with very
active bidding. The larger yearlings that could be turned out stayed within 1-3
dollars of what they would have brought last week. Fleshy soft calves, especially
over 550lbs were not as attractive and sold mostly 3-6 lower.Light muscled or off colored calves also didn’t
have as many takers and sold 3-6 lower as well.Slaughter cows and bulls were mostly steady to a few dollars cheaper
depending on quality.